Megasoft Limited, a Hyderabad-based products company, expects to garner more than 50 per cent of its revenues from its mobile commerce and mobile advertising practices over the next two years, according to its managing director and chief executive officer, G V Kumar.
At present, Megasoft derives 60 per cent of its revenues from the prepaid market in the US, 20 per cent from mobile commerce, 4 per cent from mobile advertising and 4 per cent from roaming.
“With the average revenue per user (ARPU) falling and voice and texting revenues inching closer to becoming zero in a matter of time, carriers are now looking at new avenues of revenues. With the availability of bandwidth and the 3G spectrum, we are looking at pushing our new patent-pending mobile advertising platform to create new streams of revenues for the carriers,” he told Business Standard.
Megasoft has recently piloted its new mobile advertising platform ‘Xius AdValue’ – which allows carriers to send video and voice advertisements, SMS and text inserts to subscribers on one integrated platform – with two larger carriers in the US. “We are slated to go live with one of these carriers in the next three months,” Kumar said.
Stating that the US alone was expected to spend close to $30 billion on mobile advertising in the next five years, he said the company was primarily looking at tapping the US, Latin America and the Asian markets for its new business. “We are currently in talks with 10 large carriers in the US for AdValue and two operators in India and we should be be signing three clients this year,” Kumar said.
Post the exit of its IT business ‘BluAlly’ in October 2009, Megasoft, which follows a January-to-December financial year, is fully focused on positioning itself as a pure-play telecom services player and posted a net profit of Rs 4.17 crore in the first quarter ending March 2010, as against Rs 12 lakh in the corresponding quarter last year on the back of good performance by its telecom division. Its revenues stood at Rs 40 crore during the quarter, as against Rs 75.22 crore during the same period a year ago, reflecting a decline of 48 per cent. Last year, the company’s revenues stood Rs 300 crore (with IT accounting for 45 per cent).
“Our products business (telecom) has stabilised and we have moved away from the licensing to a monthly revenue-based (pay-per-use) model. Currently, 75 per cent of our revenues come from monthly managed services. With highly-predictable revenues from long-term contracts from large carriers (50 active clients), we expect to sustain and grow our current earnings before interest, taxes, depreciation and amortisation (EBIDTA) of 30 per cent and revenue run rate during this fiscal,” Kumar said.
Kumar said the company was looking at acquiring a mobile application or telecom infrastructure company for around $50 million (around Rs 225 crore), the process for which would begin during this year. “The buyout will be funded through leveraging our immovable assets (106 acres of land) at Visakhapatnam, which came into our fold with the acquisition of VisualSoft Technologies,” he added.